The Federal Housing Administration (FHA) has just recently announced new lending rules for condominium buyers, which are sure to be a blow to the numbers of buyers who have increasingly relied on FHA financing. The rules place limits on the number of buyers in a given building who can get FHA financing and in new buildings, where at least 30 percent of the units must be pre-sold before the agency insures new loans. Unlike traditional mortgages, FHA loans only require a 3.5 percent downpayment, a reason why one in four new loans today is an FHA mortgage.

Although this would appear to have strong rippling effects in the condo market, on Anna Maria it is not likely to have major impact. For one thing, FHA loans are meant only for primary residences—while on Anna Maria buyers tend to buy second homes or investment properties primarily. For another, condo buyers in general, have already experience the tight restrictions in place with regards to Fannie Mae and Freddie Mac mortgages for the last year.

It’s no surprise that the Feds have tightly cinched lending rules and regulations. They are only trying to ensure that customers purchase units in viable buildings and that defaults on condo projects don’t rise too high. While I applaud the move for now, I just hope that they’ll be flexible enough to know when it’s time to loosen the knot.

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